3/5/2011
Table of Contents
- Status of Key Market Parameter
- Broad Stock Market still in 6-Month Rising Wedge
- Market Volatility is below the Panic Threshold
- Asset Class Performance Ranking with Oil Leading
- Sector Performance Ranking with Energy Sector Leading
- BRIC Stock Market Performance Ranking with Russian Market Leading
Current Status of the LWX (Leading Wave Index)
The LWX Indicator in Last Four Weeks (Past)
The LWX Indicator in Next Four Weeks (Forecast)
Broad Stock Market Index still in the 6-Month Rising Wedge
The Dow Jones Wilshire 5000 index, as an average or a benchmark of the total equity market, continues forming a 6-month Rising Wedge that was corrected in both upside and the downside during last three weeks. The broad market closed with slightly negative readings of both the trend and momentum indicators last Friday. The market is in the choppy zone of the rising wedge. The Leading Wave Index (LWX) indicator, color coded in the price bars of the following daily chart of the Wilshire 5000 index, closed in bullish. The sell-off during last two weeks released some volatility in the market, that reduced a lot of bearish pressure of the LWX in March and extended the neutral time-window of the LWX for another four weeks.
Broad Market Volatility is below the Panic Threshold
The Broad Market Volatility (BIX), measured from over 8000 U.S. stocks, closed at 5 on Friday and it is below the panic threshold level of 44. The volatility level of 5 is very low, and it indicates that the current market is bullish. The BIX is plotted in the following chart as compared with the Wilshire 5000 index.
Asset Class Performance Ranking with Oil Leading
The following table is the percentage change of each asset class (in ETFs) against the 89-day exponential moving average (EMA89). Currently oil and food are leading. The U.S. dollar and treasury bond are lagging.
Sector Performance Ranking with Energy Sector Leading
The following table is the percentage change of sectors and major market indexes against the 89-day exponential moving average (EMA89). The Dow Jones Wilshire 5000 index, as an average or a benchmark of the total market, is 4.81% above the EMA89. Outperforming sectors are Energy (+12.39%), Semiconductors (+6.61%), and Basic Materials (+5.59%). Underperforming sectors are Telecommunications (+0.28%), Pharmaceuticals (+1.64%), and Utilities (+1.77%), The S&P 400 Mid-cap (+6.66%) is outperforming the market, and the DJ-30 (+4.05%) is underperforming.
Energy and Semiconductors sectors have been in the leading position for seven weeks.
BRIC Stock Market Performance Ranking with Russian Market Leading
The table below is the percentage change of the BRIC stock market indexes against the 89-day exponential moving average (EMA89). The Russian market is outperforming the U.S. market, and India, Brazilian and Chinese markets are underperforming the U.S. market.
Be aware of “climate change” of international stock markets: 1) the U.S. market is decoupling from Asia market; and 2) the Russian market is decoupling from the rest emerging markets.
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